Tag Archives: lupin

The Indian Pharmaceutical sector has been on a roll ever since the global economy picked itself up post the 2007 mayhem. Given the strong fundamentals of the Indian Pharmaceutical industry and the global opportunity due to the patent cliff in the western world, listed pharmaceutical stocks have responded well and rallied substantially. While the international opportunities have been good for the bottom line, pharmaceutical stocks with a larger or significant share of the domestic pharma market have come in for a rude shock as the implementation of the new pricing policy outline of the NPPA can sharply erode profitability. As the policy elements are still not clear, it would be premature to judge how individual companies would be affected.

With a view to having a mid journey outlook on expected price performance of pharmaceutical stocks, we decided to conduct a study of the major pharmaceutical stocks using technical analysis and analyse which stocks offer the best opportunity both from a long and short point of view. The exhaustive analysis was done on 29 of the major stocks, the details of which one can obtained from the slideshow embedded below.

The analysis was done using weekly chart data to get a more longer term picture and some of the results we found were quite contrary to general market expectation; yet others were quite revealing of exciting investment opportunities. We could have easily summed up our analysis and provided an instant listing of our analysis and recommendations for the benefit of our blog readers, but we thought it more appropriate that the reader “visualize” our analysis as “one picture is worth more than a thousand words.”

Technical analysis is a great science for stock price forecasting, but the overall investment decision can be more solid if backed by hard core fundamental study. In part 2 of the Indian Pharmaceutical Outlook, we would be providing extremely high quality fundamental evaluation on the fortunes of these very 29 stocks so that our faithful blog readers can make investment decisions based on comprehensive analysis.

As with all the content on this blog, the report will be provided FREE. However in order to make a point of the exclusivity of the content, we request blog readers to send us an email so that we could deliver it directly in your email inbox. This we request so that we could obtain your feedback on the same report so that we can improve on the content. We would also like to solicit your opinion on the type of content that readers find interesting so that future blog posts could be based more on reader interest rather than just what we think you should read.

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So please drop us an email at bolinjkar.vinit@gmail.com in case you would like to receive the report.

Hope you enjoy reading the Technical Outlook of the Indian Pharmaceutical Sector December 2012 as much as I enjoyed creating it. So tell us which is your favourite pharma stock.

Disclaimer: The views expressed in this article are entirely my own and do not reflect the views of my employer. This report is neither an offer nor a solicitation to purchase or sell securities. The information and views expressed herein are believed to be reliable, but no responsibility (or liability) is accepted for errors of fact or opinion. Writers and contributors may be trading in or have positions in the securities mentioned in their articles. Neither http://winningtrades1.com or myself accepts any liability arising out of the above information/articles.

We initiate coverage on Wockhardt Limited (WOCKPHARMA; WPL) as a BUY with a Price Objective of ` 978 (target 10.0x FY14 P/E). At CMP of ` 688 the stock is trading at 4.1x and 7.9x its estimated earnings for FY2013E & FY2014E representing a potential upside of ~73% over a period of 18 months. With the contingent liability concerns addressed and bulk of FCCBs already repaid, the sale of nutrition business will lead to a substantial increase in cash which could be used to draw down debt or pursue organic / inorganic grow opportunities. Further its portfolio of high margin niche products and impressive FTF launches should provide for strong growth in revenues (12.3% FY11-14 CAGR) to ` 5311.2 crore and earnings (123.6% FY11-14 CAGR) of ` 97.8 /share by FY14.

During the period 2003 through 2008, Wockhardt has traded mostly in line with the 1 Year forward PE multiple of its peers viz: Sun Pharma, Cipla,
Lupin and Glenmark. However, post its derivative losses, Wockhardt’s EPS turned negative. Now that the balance sheet is all cleaned up and all
contingent liabilities addressed, we expect that going forward, Wockhardt will catch up with its peers leading to a substantial re-rating of the stock. This implies that it wont be surprising if Wockhardt’s 1 year forwar price earning multiple were to trade in the mid teens, in line with that of its peers.

In addition most the development financial institutions with the exception of LIC (Life Insurance Corporation of India) have virtually exited the counter (or have miniscule holdings). In my opinion the stock has moved into strong hands and smart money continues to accumulate.

Disclaimer: The views expressed in this article are entirely my own and do not reflect the views of my employer. This report is neither an offer nor a solicitation to purchase or sell securities. The information and views expressed herein are believed to be reliable, but no responsibility (or liability) is accepted for errors of fact or opinion. Writers and contributors may be trading in or have positions in the securities mentioned in their articles. Neither https://winningtrades1.wordpress.com or myself accepts any liability arising out of the above information/articles.

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